A synopsis of today's Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.

In light of what we've seen in the financial sector recently, is it better to invest in an industry that manufactures goods?

I don't feel qualified to pick between a financial company and a capital goods company. They each have their ups and downs. What I do know about the financial companies is that I saw them make the exact same mistakes back in the 1980s when I lived in Southern California and the Savings & Loans and Orange County went bankrupt. I also have seen Boeing (NYSE: BA) and Fluor (NYSE: FLR) go through hard times -- repeatedly.

I think one should stick to what they know...and I know Aerospace & Defense as well as Engineering & Construction. Having said that, I think this is a great time to own E&C stocks. And, when Boeing starts delivering the 787, it will be a great time to own Aerospace stocks. The big question I have is: What will happen to defense spending? That question affects both of those sectors.

Is there much reliance on U.S. government contracts for companies in your coverage? If so, does the Treasury bailout look as if it will negatively affect construction of bridges, roads, etc.?

Some of the companies have fairly large exposure to defense contracting, particularly KBR, Inc. (NYSE: KBR) and URS Corp. (NYSE: URS). However, as we wind down our military activity, there is a good possibility that reconstruction efforts will accelerate.

I don't think the bailout will be much of a factor on local E&C activities, as most states are now moving to using bonds to support their infrastructure projects, and people are eager to loan money to their states as opposed to whoever will be the next big investment broker (probably somebody in Florida or South Carolina...but not New York).

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The performance of the Zacks Rank portfolios shown above for annual and year-to-date periods are the linked monthly total returns (price changes + dividends) of equal weighted hypothetical portfolios, consisting of those stocks with the indicated Zacks Rank, assuming monthly rebalancing and zero transaction costs. These are not the returns of actual portfolios. The hypothetical portfolios were created at the beginning of each month from Jan 1988 forward based on the values of the Zacks Rank available to Zacks' clients before the beginning of each month.

The portfolios created monthly from 1988 through September 2006 exclude ADRS and are comprised of stocks that have the indicated Zacks Rank and were covered by at least two analysts at the time of the stocks inclusion in the portfolio. Starting in October 2006 and going forward, the portfolios are comprised of all stocks with the indicated Zacks Rank and do not exclude ADRs, which is more reflective of the list of stocks that customers will find on the Zacks web sites. 2007 returns are for the period of Jan 1 - Jun 30, 2007. These performance numbers have been audited from 1995 through 2003 by Autschuler Melovan, a division of American Express Financial.